Sensex Surges 537 Points; Banking and Auto Stocks Witness Buying

Fri, 17 May Closing

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Indian share markets continued their momentum and ended their trading session on a positive note today. Gains were largely seen in the banking sector, FMCG sector and auto sector.

At the closing bell, the BSE Sensex stood higher by 537 points (up 1.4%) and the NSE Nifty closed higher by 150 points (up 1.3%).

The BSE Mid Cap index ended the day up by 1.1%, while the BSE Small Cap index ended the day up by 0.5%.

Asian stock markets finished on a mixed note as of the most recent closing prices. The Hang Seng stood down by 1.2% and the Nikkei was trading up by 0.9%.

European markets were trading on a negative note. The FTSE 100 was down by 0.3%. The DAX was trading down by 0.9%, while the CAC 40 was down by 0.4%.

The rupee was trading at 70.16 to the US$ at the time of writing.

Indian share markets were trading in the green just ahead of exit polls results which are scheduled to come out on Sunday.

The polling will end on May 19, 2019, after which exit polls will start to come out.

How the market reacts to the outcome remains to be seen. We will keep you updated on all the developments from this space. Stay tuned.

Also, speaking of the general mood in Indian stock markets these days, a lot of market participants are playing the prediction game ahead of elections.

A common theme is to sit on cash to escape the volatility ahead of the upcoming elections. In case there is an unexpected event, you can then get in post the correction.

But does timing the market work?

Not really, if you see the market performance in the year of the past three national elections (2004,2009 and 2014).

Downside of Timing The Stock Market

Looking at the returns in the above chart, staying out of the market to escape volatility would have been a costly affair every time.

The market gave above average returns in all three of those years.

This does not mean one can expect the same in the future.

But there's one thing for sure. Predicting short-term directions of the market is a futile and many a times a costly affair.

That's why we believe in picking safe stocks when they are actually 'safe' i.e. during such times of high pessimism and uncertainty.

In the news from the automobile sector, market participants were tracking Bajaj Auto share price as the company posted 20.9% year-on-year (YoY) rise in standalone profit at Rs 13.1 billion over Rs 10.8 billion in the same period last year.

Standalone revenue from operations jumped 8.9% YoY to Rs 73.9 billion during the quarter.

The company sold 11,93,590 standalone units in March quarter against 10,45,378 units in the same period last year.

During the quarter, the company reported its highest-ever operating profit of Rs 53.8 billion with EBITDA margin of 17.6%.

On a consolidated basis, the auto firm posted 20% YoY rise in profit at Rs 14.1 billion.

The board of the company has recommended a dividend of Rs 60 per share.

Speaking of auto sector, note that automobile companies have shifted to low gear and demand has flattened across the board. NBFC crisis, followed by lower off-tick of volumes, and increasing competition has taken a major toll on automobile original equipment manufacturer (OEMs).

According to reports, major dealers across the country have been burdened with high inventory prompting OEMs to re-align their production.

While private vehicles (PVs) have been facing stiff task with dealers across geographies grappling with higher inventory, commercial vehicles (CVs) are seeing some revival led by fresh disbursal by NBFCs.

It would be interesting to see how this trend will pan out ahead.

Also, for auto stocks, one thing to keep in mind is that not all auto companies will make money over time. And also, you shouldn't stay away from auto stocks altogether.

Even Tanushree Banerjee, Co-head of research at Equitymaster believes that there are businesses in this sector that you cannot ignore. She is particularly talking about the blue-chip auto stocks.

She believes, this could be the opportunity long term investors were waiting for.

Moving on to the news from the pharma space, Shilpa Medicare share price was also in focus today as the company said it has received final approval from the US health regulator for Docetaxel Injection. The injection is used for treatment of various types of cancers.

The company in its filing said that it has received US Food and Drug Administration final approval for its abbreviated new drug application(ANDA) Docetaxel Injection USP in the strengths of 20 mg/mL, 80 mg/4 mL (20 mg/mL), and 160 mg/8 mL (20 mg/mL).

The drug is a generic equivalent of reference listed drug (RLD) Taxotere used in the treatment of breast cancer, non-small cell lung cancer, prostate cancer, castric adenocarcinoma, head and neck cancer as recommended in the label approved by USFDA.

As per a data, the company said the US market for Docetaxel Injection USP is approximately US$ 32.13 million.

Speaking of pharma sector, we at Equitymaster believe that pharma companies that invest in creating a pipeline of complex generics or building competencies in alternative dosage forms are better equipped to tackle the changing dynamics in the US generics market as well as in the overall industry.

To know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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